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Europe Should Call Trump’s Bluff
Spending 4 percent of the EU’s GDP on defense would boost sagging economies and protect the continent at a time when U.S. leadership is lacking.
“Very well, alone” are the words beneath the famous June 1940 cartoon by David Low depicting a solitary British soldier facing a rough sea and enemy bombers. France had fallen, Panzer divisions had reached the English Channel, and Britain was the only major power holding out against the Nazis. At this point in the greatest struggle between freedom and tyranny, the Land of the Free hadn’t shown up yet.
“America First” — the slogan of the isolationists in Congress in the early days of World War II — would tie President Franklin D. Roosevelt’s hands for another 18 months as Europe was left to its fate.
Fast forward nearly 80 years, and the president of the United States is an America First man, whose only consistent view seems to be that he hates alliances on principle and who has threatened to walk out of NATO unless Europe doubles its defense spending target to 4 percent.
Donald Trump has transformed what was a long-running risk for Europe — U.S. disengagement as it focuses on rivalry with China — into an acute strategic shock. To ram home the point, two days before he met Russian President Vladimir Putin in Helsinki on July 16, Trump called the European Union a “foe” in an interview with “CBS Evening News.” An unprepared Europe faces two significant threats: from Russia to the east, and from civil war and state failure to the south. These threats are serious but within Europe’s capacity to manage — if it tries.
After all, Russia’s GDP is only the size of Spain’s and Portugal’s put together. Europe should be able to take care of Putin on its own. Meanwhile, Libya is in chaos because European powers couldn’t clean up the mess that their own intervention caused, a mission that itself ran so low on precision munitions that EU stocks had to be topped up by the United States, but a union of 443 million people (508 million while Britain is still part of it) should be able to cope with the task.
Trump won’t be able to persuade the U.S. Senate to withdraw the country from NATO, but he could react as slowly to Russian hybrid war in Estonia as he has to Russian hacking during U.S. elections. And what price will he demand the next time European air forces need to replenish their stocks of Tomahawk missiles?
In theory, Europe doesn’t actually need to spend 4 percent of its output on defense — the EU’s more than $220 billion defense budget (about $170 billion excluding Britain) is more than enough if it were spent efficiently, but what if the EU were to call Trump’s bluff?
The EU has yet to fully recover from the financial crisis of 2007 to 2008 because too many conservatives, particularly in Germany, oppose the Keynesian fiscal stimulus needed to overcome the damage. But defense spending is seen differently, and Germans in particular are much more in favor of European defense than a specifically German army.
Could the EU increase its collective defense expenditure to 4 percent of GDP by 2024? The answer is yes, and the cost would be minimal. Using defense spending figures from the Stockholm International Peace Research Institute, I modeled the effect of increasing the defense budgets of each EU member state each year so that they reach 4 percent of GDP by 2024, paid for by government borrowing.
This is not reckless deficit spending. On the contrary, unless a nation only buys foreign equipment, peacetime military spending is generally injected back into the economy in which it’s spent. It pays soldiers’ salaries; buys weapons, communications systems, and uniforms; and is invested in research and development — immediately paying scientists and engineers and in the long term improving productivity and discovering new technology. This economic boost is called a “multiplier.”
Using multipliers to calculate how much extra borrowing the EU would need to bring its defense expenditure up to 4 percent of GDP by 2024, I found that even with a low economic multiplier of 0.6, most countries only needed to increase borrowing by just over 1 percent of their own GDP.
For some countries, such as France, which already spends almost 2.3 percent of its GDP on defense, the rate of increase would be modest. For others, such as Spain and Italy (currently 1.2 and 1.5 percent, respectively), it would be sharp. But though the budgets are national, because taxes are raised domestically and obligations to repay debt are held by individual member states, the bulk of the money should be spent at the EU level, where economies of scale can operate, continent-level force planning can be attempted, and the stimulus from arms production and R&D can revive some of Europe’s depressed regions.
Europe should consider that the strategic shock of being seen as a “foe” by the president of the United States justifies excluding these increases in military expenditure from the eurozone’s government deficit targets — and, because Germany runs a surplus, some of that surplus should be devoted to European military capability.
The bulk of the money should be spent on equipment and research, putting Southern Europe’s unemployed to work and spurring advances in technology. European militaries’ equipment is often outdated, and they lack what are known as strategic enablers: airlift capacity, in-flight refueling, long-range bombers, precision weapons, and air defenses.
While the EU-developed Galileo satellite navigation system will free them of dependence on the United States’ GPS, Europeans lag far behind in other areas. Nor is the French nuclear arsenal (which, unlike Britain’s, doesn’t depend on U.S. technology) enough without the backup of the U.S. nuclear umbrella. Europe’s nuclear deterrent would also need to be significantly expanded if it is to be made truly independent. The EU would also need to make quick strides in missile defense, which it has largely ignored.
Fortunately, the last two years have seen the European Union develop the mechanisms that could be expanded to cope with all this extra money. The EU’s effort to integrate its armed forces, known as Permanent Structured Cooperation, is getting up and running and could drive new training and equipment programs. An EU defense fund is being set up to encourage genuinely pan-European defense development. It is supposed to hand out more than $580 billion over the next five-year budget period. It should absorb a majority of the $2.3 trillion of supplementary spending; the rest could be spent by national governments to fill gaps caused by neglect and post-crisis austerity.
Nor would this increase require mass military recruitment — EU member states already have approximately 1.4 million people under arms. And although there hasn’t been enough progress on EU strategic coordination, this is not immediately necessary. The European Intervention Initiative set up by French President Emmanuel Macron and the EU’s Gendarmerie Force could take on intervention and stabilization missions to Europe’s south.
For now, NATO structures, if expanded to include cooperation with Sweden and Finland, could take care of the defense of Europe from Russia, and in due course EU structures could grow to provide strategic autonomy in the event of the United States being paralyzed by Trump’s lack of leadership or being unable to act because of the domestic political division that follows him.
Brexit is a complication but not a fatal problem. There are ways, such as France’s intervention initiative, to involve Britain, and the EU’s new budget could be put to a Britain-friendly use by buying the second British aircraft carrier currently being built in Scotland, which the British government can’t afford to operate or protect with escorting ships and submarines.
Trump has made it clear to Europeans that he’ll only help us if we don’t need it. For once, he makes a good point. Europe is a rich continent: It’s time we were able to defend ourselves.